Saturday, 14 July 2012

Tunisia’s Government is Working on Legislation to Facilitate Islamic Finance

Tunisia’s government is working to pave the way for Islamic finance so that it can gain a stronger foothold in Tunisia’s financial services sector.

The presence of Islamic finance in the Tunisian economic landscape is minimal, largely because of a legislative void that limits the scope of Islamic products such as sukuk, or Islamic bonds.

However, a comprehensive legislative system to govern Islamic finance is in the working, said Tunisian Finance Ministry Houcine Dimassi at the 11th Carthage Conference on the “Capacity of Insurance and Re-insurance Industry to Confront New and Important Risks.” Finance Ministry officials also confirmed to Tunisia Live that studies to evaluate the opportunities of Islamic finance in Tunisia have already taken place.

“We have to find a judicial framework to legalize [Islamic financial products] and to clarify the relation between [customer and bank agent] for the good functioning of these products and transactions,” said Wadi Mzid, a director of a bank agency and a specialist in Islamic finance.

The government has already shown a commitment to Islamic finance by creating a National Committee for Islamic Finance as well as six peripheral committees that regularly meet to write up an ad hoc piece of legislation on the matter, which will ultimately be presented to the Constituent Assembly.

Despite the attention that the government appears to be giving Islamic finance, Tunisians are still new to the concept of Islamic banks as the first one was only introduced to Tunisia in 2010 when the Zitouna Bank was established. The second closest example to Zitouna in Tunisia is Al Baraka, which was established in 1983, but only serves as an off-shore bank without performing any financial services within Tunisia.

Civil society groups such as the recently-created Council of Islamic Finance in Tunisia (COFIT) and the Tunisian Association of Islamic Economics (ASTECIS) could play a role in the awareness of Tunisians over Islamic finance, and promote successful experiences with Islamic finance in countries like Malaysia.

COFIT and ASTECIS, however, may have to do more than just create visibility for Islamic finance among Tunisians. A change in mentality may also be necessary, some suggest.

“We shouldn’t reject or accept the Islamic finance by following any ideology or political point of view we have to look at it from an economic angle,” said Mzid.